18 July 2017
This week the Government will publish its rail strategy, which goes by the name of the High Level Output Specification (HLOS). This HLOS is likely to take a different approach to previous ones, in light of the recent failings of Network Rail. This briefing sets out what is likely to be in it and what to look out for.
Rail use is booming, and has continued to grow for both passengers and freight. The number of people using trains is now at levels not seen since the 1920s, on a smaller network. Freight traffic is also growing with new services from ports, supermarket traffic and household names such as Eddie Stobart running trains as well as lorries. In some areas rail faces big capacity problems with crowded trains, tracks and stations that are full and demand still growing. Some rural branch lines that were proposed for closure years ago are now seeing record growth and use overcrowded trains.
What is being published?
Since privatisation, the rail industry is regulated through five year ‘control periods’. Currently we are in Control Period 5, which runs 2014-19. In advance of the next control period, (CP6 2019-24) the Government has to say what outputs it wants from the rail industry during that time. This High Level Output Specification (HLOS), due to be published this week, is required by law and is accompanied a Statement of Funds Available (SOFA), which says how much the Government wants to spend on these outputs. The Office of Rail and Road (ORR) then takes these statements and negotiates with the rail industry, especially Network Rail, to get it to price these outputs within the funding limit.
What will be in the HLOS?
Whereas the last HLOS had lots of big projects in it, Network Rail's inability to deliver, coupled with a continuing tight spending environment, means this one will be different and will move away from a five-year time horizon for HLOS towards a rolling programme of projects with more emphasis on maintenance and renewal of the existing network. We expect to see three main things:
- A few big schemes will definitely get the go ahead - Dawlish resilience is a Government priority; Cross Rail 2 is likely to be in there; and HS3 (Liverpool to Hull and Newcastle) may also get funding.
- Incremental improvements to meet the most pressing challenges, mainly to do with extra capacity and technology to address overcrowding. This might mean some of the promised electrification schemes get dumped in favour of investment in bi-mode trains, battery trains and digital rail instead
- Transport Secretary Chris Grayling MP has also called for costs to be reeled back in with Network Rail route directors and train operating companies (TOCs) leading the way.
We have several concerns about HLOS, and specifically about a pipeline approach:
- A rolling programme of projects sounds great, but it could be a good excuse to do nothing. It also makes it much easier to cut funding in future years because there is no commitment to specific schemes
- There is a danger that you end up with bits and pieces of investment, rather than transformative packages which make a real difference
- It automatically has a bias towards investment in parts of the network which are already busy. The Government’s transport modelling and appraisal tool favours ‘more of the same’, which in practice will mean more money going to London and south east England and not going to rebalance the economy as the Industrial Strategy suggested it should. Passengers in northern England and the Midlands will be rightly angered if the promised electrification of their lines is cancelled in favour of schemes to tackle overcrowding in south east England
- Previous administrations have moved investment in the strategic rail network away from a pipeline approach and towards something more strategic precisely because of the problems outlined above.
We also want to see specific funds allocated in the next HLOS to the Strategic Freight Network for upgrades to routes to ports and rail freight terminals (see www.freightonrail.org.uk); for accessibility improvements at stations; and for cycle and rail integration. There is also demand for the New Stations Fund to be accepted as a rolling programme within HLOS, rather than as a separate sporadic fund.
Whatever HLOS looks like, passengers should not be responsible for funding investment in the rail network through fare increases as a fast, reliable and environmentally friendly network benefits the whole country, not just those who use the trains regularly.
For further information please contact Alice Ridley on 020 7566 6495 / 07984 773 468 or email@example.com
Notes to Editors
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